Australian Broker Call

Ord Minnett rates AGL as Buy (1) -

The non-binding takeover bid for Origin Energy ((ORG)) from a consortium implies to Ord Minnett an $11-12/share price for AGL Energy, assuming similar energy markets businesses.

Indeed, on most valuation metrics AGL Energy looks attractive, when compared to the Origin bid, according to the broker.

The Buy rating and $9.50 target are unchanged.

Target price is $9.50 Current Price is $7.55 Difference: $1.95
If AGL meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $8.53, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates AX1 as Overweight (1) -

Consensus had expected 1H sales growth of 20% for Accent Group, yet a trading update for the first 18 weeks of the financial year revealed sales rose by 52%. This is an acceleration from the 49% of sales growth in the first seven weeks.

The broker notes gross margins also were a beat against consensus and the target for 1H store openings is 50, which was originally the FY23 target.

The analyst expects upside to consensus 1H EPS expectations, though the market will likely remain wary on the 2H, given the macroeconomic backdrop.

The Overweight rating and $1.85 target are unchanged. Industry View: In-Line.

Target price is $1.85 Current Price is $1.51 Difference: $0.345
If AX1 meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $1.82, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates AX1 as Neutral (3) -

Accent Group's sales grew 52% in the first 18 weeks of the first half. Gross margins expanded 570bps on the previous year, UBS notes, due to a focus on driving full price/margin sales.

An improving store count growth trend from the first seven weeks suggests strong underlying demand and positions the business well for the remainder of the half, UBS suggests.

Accent guided to 50 store openings in FY23 at the FY22 result and is now guiding to 50 new store openings in the first half. Target rises to $1.80 from $1.70, Neutral retained.

Target price is $1.80 Current Price is $1.51 Difference: $0.295
If AX1 meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $1.82, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates BRG as Neutral (3) -

Macquarie leaves its Neutral rating and $23.10 target unchanged for Breville Group after reviewing 3Q results for overseas peer Delonghi.

Delonghi management noted its 3Q was “inline with company guidance and market expectations”. The company disclosed double-digit growth in the coffee segment in North America, and mid-single digit at a group level.

Target price is $23.10 Current Price is $19.95 Difference: $3.15
If BRG meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $24.33, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates CBA as Sell (5) -

CommBank is set to close out the first quarter reporting season among the major banks, and given recent results from peers Citi is downgrading its earnings forecasts through to FY25 by between -2% and -5%.

According to the broker, the update reflects earlier net interest margin leverage to deposits, lower non-housing growth and higher costs. Citi anticipates the bank will report net interest margin growth to 1.96% and 6% core earnings growth. 

The Sell rating and target price of $85.50 are retained.

Target price is $85.50 Current Price is $104.04 Difference: minus $18.54 (current price is over target).
If CBA meets the Citi target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $93.91, suggesting downside of -10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates CPU as Overweight (1) -

Morgan Stanley raises its target price for Morgan Stanley to $31.60 from $29.40 and retains its Overweight rating. Industry view: Attractive.

This follow's the broker's initial assessment last week as summarised below:

Computershare's new FY23 guidance for 90% EPS growth, up from 55%, is a beat versus the forecasts of Morgan Stanley and consensus by 18% and 22%, respectively. Consensus upgrades are expected.

Margin income guidance rises to US$800m from US$520m, which is mostly attributable to higher interest rates, though US96m came via rate recapture or portfolio efficiencies, explains the analyst.

The broker highlights a better-than-expected performance from the Computershare Corporate Trust business and the growth in Governance Services.

Target price is $31.60 Current Price is $27.07 Difference: $4.53
If CPU meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $32.21, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates CTM as Outperform (1) -

The mineral resource update at Centaurus Metals' Jaguar operations was significantly better than Macquarie had expected. 

The analyst now forecasts a mine life of around 22 years at circa 20ktpa of nickel, significantly higher than the Scoping Study figures of 13 years at 20ktpa.

The target rises to $1.60 from $1.30 following a longer estimate for the Jaguar mine life and a rolling forward of the broker's financial model. Outperform.

Target price is $1.60 Current Price is $1.05 Difference: $0.55
If CTM meets the Macquarie target it will return approximately 52% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates CXO as Outperform (1) -

Crushing of direct shipping ore (DSO) has commenced at Core Lithium's Finniss lithium mine. Macquarie expects first shipment of DSO before the end of 2022.

In separate news, Mike Stone has replaced Blair Duncan as ceo, commencing from December 2022. Among other roles, Mr Stone has previously worked for Rio Tinto ((RIO)) at its Weipa operations in Queensland and its Oyu Tolgoi open pit mine in Mongolia.

The Outperform rating and $1.90 target are unchanged.

Target price is $1.90 Current Price is $1.60 Difference: $0.3
If CXO meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates INA as Buy (1) -

Ingenia Communities still expects to meet the lower-end of prior earnings guidance, despite a lowering of FY23 home settlement expectations to 460-485 from 525-550 due to wet weather and labour constraints.

Ord Minnett considers the lower settlements guidance is a supply-based issue.

First quarter results also revealed outperformance by the Holidays division and stronger home settlement margins, observes the broker.

The medium-to-longer term earnings profile is not materially impacted, according to Ord Minnett, and the Buy rating is unchanged, while the target slips only marginally to $5.09 from $5.11.

Target price is $5.09 Current Price is $3.90 Difference: $1.19
If INA meets the Ord Minnett target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates MVF as Outperform (1) -

Macquarie estimates market share gains for Monash IVF are implied by 1Q fresh cycle growth rates, despite growth tracking below the broker's expectations. On the other hand, growth expectations were exceeded for International cycles.

While 1H underlying profit guidance came in around -1% short of Macquarie's forecast, a 2H skew is expected. The Outperform rating and $1.30 target are unchanged.

Target price is $1.30 Current Price is $0.91 Difference: $0.395
If MVF meets the Macquarie target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting upside of 30.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates MVF as Add (1) -

Morgans assesses a solid first quarter update at Monash IVF's AGM, at which management reaffirmed FY23 underlying profit guidance of 10% or more.

Also, the analyst highlights Australian cycle volumes are tracking above industry levels, and the company continues to gain market share in key markets.

No changes are made to the broker's forecasts and the Add rating and $1.24 target are maintained.

Target price is $1.24 Current Price is $0.91 Difference: $0.335
If MVF meets the Morgans target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting upside of 30.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates NCM as Buy (1) -

Newcrest Mining has approved PC1-2 following a positive feasibility study. Citi notes the study included higher operational expenditure, up $1.20 per tonne, and project capital expenditure, up $315m. 

The company attributed the cost increase to a larger extraction footprint and inflationary pressures. Citi has updated its model for the company to account for increased costs, and has trimmed near-term earnings -2-3%. 

The Buy rating and target price of $21.00 are retained.

Target price is $21.00 Current Price is $19.16 Difference: $1.84
If NCM meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $21.14, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates NCM as Outperform (1) -

The board of Newcrest Mining has approved the progression of Cadia’s PC1-2 cave panel, the largest of Cadia’s remaining caves accounting for around 20% of reserves.

Macquarie expects the cave will be a key component of mine output for more than ten years.

The Outperform rating and $23 target are unchanged.

Target price is $23.00 Current Price is $19.16 Difference: $3.84
If NCM meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $21.14, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates NEC as Outperform (1) -

Nine Entertainment has extended its broadcast rights with Tennis Australia to include the broadcast of premium tennis from 2025-2029. Nine Entertainment will retain exclusive free to air and digital media rights to the Australian Open, and Australian team matches in the Davis Cup and Billie Jean King Cup.

Credit Suisse highlights the new deal has an average annual cost of $85m, a step up from current annual costs of $60m but lower than some prices speculated by the market. 

The Outperform rating is retained and the target price decreases to $3.15 from $3.20.

Target price is $3.15 Current Price is $2.04 Difference: $1.11
If NEC meets the Credit Suisse target it will return approximately 54% (excluding dividends, fees and charges).

Current consensus price target is $2.82, suggesting upside of 34.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates NEC as Buy (1) -

Nine Entertainment has announced the renewal of the Australian Open Tennis rights for a further five years from 2025-29, at a per annum average cost implying 42% inflation, UBS notes. Seven West Media ((SMW)) recently renewed the AFL rights for 36%.

Rising competition for premium sports content appears to have returned since covid disruption, particularly as competitors now have more balance sheet strength with which to compete, UBS suggests.

The increased cost sees earnings forecast fall -2%. Buy and $2.90 target retained.

Target price is $2.90 Current Price is $2.04 Difference: $0.86
If NEC meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $2.82, suggesting upside of 34.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates ORG as No Rating (-1) -

The offer for Origin Energy implies 7.3x one-year forward consensus earnings, UBS notes, which is a 28% premium to Origin's five-year historical average at 5.7x and a 56% premium to the 3 month volume-weighted average price.

The consortium now has to complete due diligence within eight weeks if the offer is to become binding, the ACCC has to assess the competition impact, and in the context of the domestic gas crisis, the FIRB has to decide if its a good idea to hand more of our critical services over to foreigners.

UBS is on restriction.

Current Price is $7.83. Target price not assessed.

Current consensus price target is $7.68, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates PLS as Outperform (1) -

In what Macquarie regards as a key positive for additional funding flexibility for the P680 project during Pilbara Minerals' high-growth phase, the Australian government has provided a $250m long-term debt facility.

The funding includes $125m approved by Export Finance Australia and a further $125m from the Northern Australia Infrastructure Facility.

The Outperform rating and $7.70 target are unchanged.

Target price is $7.70 Current Price is $5.32 Difference: $2.38
If PLS meets the Macquarie target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting downside of -13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.4

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates PPT as Neutral (3) -

An increased takeover offer for Perpetual was anticipated by the market, but 10% to $33 per share was perhaps less than the market expected, UBS notes, and is also still a discount to the broker's sum-of-parts valuation. Rejection is thus unsurprising.

The end outcome is highly uncertain at this stage, and UBS estimates the market-implied probability of the Pendal Group ((PDL)) merger progressing has reduced from 50% to 20%, particularly given Perpetual's comments around potential interest from other parties.

Neutral and $26.60 target retained.

Target price is $26.60 Current Price is $33.40 Difference: minus $6.8 (current price is over target).
If PPT meets the UBS target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.84, suggesting downside of -9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates RHC as Downgrade to Neutral from Buy (3) -

Ramsay Health Care's latest trading update has given Citi increased confidence that post-covid recovery is underway in Australia. Despite this, Citi flags that performance in Europe and the UK remains challenged. 

The broker highlights labour shortages had a significant impact on first quarter performance in the UK. While the company guided to a gradual recovery through FY23, ahead of more normalised conditions in FY24, Citi lowered earnings per share forecasts -15%, -5% and -2% through to FY25 on a weaker quarter. 

The rating is downgraded to Neutral from Buy and the target price decreases to $62.00 from $73.00.

Target price is $62.00 Current Price is $59.06 Difference: $2.94
If RHC meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $67.16, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates RHC as Neutral (3) -

Ramsay Health Care's European operations continue to drag on group results according to Credit Suisse. The company reported an earnings decline of -13% year-on-year in the first quarter, a substantial miss to consensus forecasts.

The company's European division reported earnings of $17.7m, down -73% year-on-year, as high inflation and labour challenges continue to impact without the benefit of covid-related cost support. 

Australia Pacific shows signs of improvement, and the broker expects trends to continue to improve. The Neutral rating is retained and the target price decreases to $62.00 from $64.00.

Target price is $62.00 Current Price is $59.06 Difference: $2.94
If RHC meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $67.16, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates RHC as Underweight (5) -

Morgan Stanley highlights from Ramsay Health Care's 1Q result a progressive improvement for the business over the 4Q, with management now anticipating a gradual recovery through FY23. More normalised conditions are expected from FY24.

The broker also highlights a material decline in staff absenteeism and turnover.

The Underweight rating and target price of $64.40 are retained. Industry view: In-Line.

Target price is $64.40 Current Price is $59.06 Difference: $5.34
If RHC meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $67.16, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates RHC as Add (1) -

Morgans key takeaway from 1Q results for Ramsay Health Care is improving conditions across all markets as the number of covid cases ease.

The broker raises its FY23-25 underlying earnings forecasts by 2.4%, 4% and 3.8%, respectively, and increases its target to $74.41 from $72.26. Add.

Management noted declining work force absenteeism and a slowing of turnover and is confident of a more normalised work force leading into 2023.

Target price is $74.41 Current Price is $59.06 Difference: $15.35
If RHC meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $67.16, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates RHC as Upgrade to Buy from Accumulate (1) -

Ord Minnett sees upside for Ramsay Health Care from a domestic recovery and upgrades its rating to Buy from Accumulate, while the $71.00 target is unchanged.

First quarter commentary was upbeat around supportive rates from the health funds and a lessening of workforce shortages in Australia, though offshore results provide a note of caution for the analyst. This is especially the case in France, with reduced government support.

While the broker believes media reports of a fourth covid wave is a threat, it's felt the company can now manage this new normal.

Target price is $71.00 Current Price is $59.06 Difference: $11.94
If RHC meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $67.16, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates SUN as Add (1) -

Morgans upgrades FY23 and FY24 EPS  forecasts for Suncorp Group by 11% and 3%, respectively, to reflect an expected business interruption provision release in 2H of FY23 and improved bank forecasts (after reviewing1Q results).

These changes follow information obtained at the company's investor day. 

The broker now sees the group's 50% cost to income (CTI) target by 2H23 as being more achievable, something the market had been skeptical about.

The target rises to $13.98 from $13.70. Add.

Target price is $13.98 Current Price is $12.01 Difference: $1.97
If SUN meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $13.49, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates SUN as Buy (1) -

Suncorp Group's investor day revealed to Ord Minnett a strong performance by the Bank segment and an on-track General Insurance business.

Guidance for the insurance trading ratio (ITR) of 10-12% was reiterated. For the bank, the 1Q net interest margin (NIM) was 1.99% and is likely to remain above the target range of 1.85-1.95% during the year, according to management.

The Buy rating and $13.25 target are maintained.

Target price is $13.25 Current Price is $12.01 Difference: $1.24
If SUN meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $13.49, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates WHC as Buy (1) -

Due to wet weather, Whitehaven Coal has downgraded its FY23 production by -5%, which has also resulted in increased costs guidance on a per unit basis by -5%.

While the downgrades are disappointing, Ord Minnett believes similar weather impacts sector-wide may prolong the current coal price premium.

The broker's target falls to $11.10 from $12.20 on the lower guidance and after trimming its FY23 coal price forecasts. In the past fortnight thermal coal prices have corrected by -22% to US$289/t. Buy.

Target price is $11.10 Current Price is $8.33 Difference: $2.77
If WHC meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $10.98, suggesting upside of 32.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources